Ragsdale v. Wolverine Worldwide, Inc.

• Decision Date: 12 April 2000
• Docket Number: No. 99-3319,99-3319
• Parties: (8th Cir. 2000) TRACY RAGSDALE; WARREN E. DUPWE, TRUSTEE IN BANKRUPTCY FOR THE TRACY RAGSDALE ESTATE, APPELLANTS, v. WOLVERINE WORLDWIDE, INC., DOING BUSINESS AS FROLIC FOOTWEAR, A FOREIGN CORPORATION DOING BUSINESS IN THE STATE OF ARKANSAS, APPELLEE. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 933

218 F.3d 933 (8th Cir. 2000)

TRACY RAGSDALE; WARREN E. DUPWE, TRUSTEE IN BANKRUPTCY FOR THE TRACY RAGSDALE ESTATE, APPELLANTS, v. WOLVERINE WORLDWIDE, INC., DOING BUSINESS AS FROLIC FOOTWEAR, A FOREIGN CORPORATION DOING BUSINESS IN THE STATE OF ARKANSAS, APPELLEE.

No. 99-3319

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: April 12, 2000

Filed: July 11, 2000

Rehearing and Rehearing En Banc

Denied Aug. 8, 2000

Appeal from the United States District Court for the Eastern District of Arkansas.

Before Wollman, Chief Judge, Magill, Circuit Judge, and Frank,^* District Judge.

Magill, Circuit Judge.

This appeal considers the validity of certain regulations promulgated by the Department of Labor (DOL) under the Family and Medical Leave Act of 1993 (FMLA), 29 U.S.C. 2601, et seq. The appeal arises out of a suit brought by Tracy Ragsdale against Wolverine Worldwide, Inc. (Wolverine) under the FMLA, the American's with Disabilities Act of 1990 (ADA), 42 U.S.C. 12101, et seq, and the Arkansas Civil Rights Act of 1993 (Arkansas Act), Ark. Code Ann. 16-123-101, et seq, alleging that Wolverine improperly denied her FMLA leave and terminated her in violation of the FMLA, ADA, and Arkansas Act. Ragsdale appeals the district court's ¹ grant of summary judgment to Wolverine on her FMLA claim. We affirm the judgment of the district court.

I. BACKGROUND

The relevant factual background of this case is relatively simple. Ragsdale began her employment with Wolverine on March 17, 1995. She was diagnosed with cancer in February 1996 and requested medical leave from Wolverine on February 21, 1996. Wolverine granted her request, and Ragsdale's leave commenced on that date.

Wolverine's leave policy allowed employees with six months of service to take leave for up to seven months. The leave policy required employees on leave to submit requests for extensions of leave every thirty days. Consistent with that requirement, Ragsdale requested extensions of her leave on March 18, April 22, May 21, June 20, July 22, and August 15 of 1996. Each request for an extension was granted by Wolverine. Wolverine did not, however, notify Ragsdale of her leave eligibility under the FMLA or her right to have leave designated as FMLA leave.

On September 20, 1996, Ragsdale was terminated because she had exhausted her seven months of company provided leave and was unable to return to work. On September 26, 1996, Ragsdale returned to Wolverine and requested additional FMLA leave. She was informed that she had requested and utilized all of her available leave. Ragsdale then requested that she be allowed to return to work on a reduced hour schedule. Wolverine denied her request. Ragsdale's physician released her to work in December of 1996, and she has been actively employed in full-time positions since December 31, 1996. Ragsdale is no longer being treated for cancer and is currently capable of working without restrictions.

On December 22, 1997, Ragsdale filed suit against Wolverine alleging claims under the FMLA, ADA and Arkansas Act. On November 3, 1998, the district court granted summary judgment to Wolverine on Ragsdale's FMLA claim. The court found that the DOL's regulations, which provide that unless the employer prospectively designates company leave as FMLA leave, the twelve week FMLA leave entitlement does not begin to run, are based on an erroneous interpretation of the FMLA and cannot be enforced. The district court also dismissed Ragsdale's ADA and Arkansas Act claims, holding that Ragsdale was not qualified to perform the essential functions of her job at the time of her termination. Subsequently, Ragsdale filed the present appeal.

II. ANALYSIS

Ragsdale claims that the district court erred in invalidating the DOL's regulations and dismissing her FMLA claim. She claims that because Wolverine never formally designated any of the seven months of company leave as FMLA leave, DOL regulations properly mandate that the clock never began to run on her FMLA leave. Thus, Ragsdale contends that she was denied twelve weeks of FMLA designated leave, and that she remained entitled to be restored to her position through December 1996 when she was able to return to work. Wolverine concedes that it did not formally designate Ragsdale's leave as FMLA-qualifying but argues that the DOL regulations are invalid because they impermissibly expand the scope of rights conferred on employees under the FMLA. We review the district court's grant of summary judgment de novo. See Sahulka v. Lucent Tech., Inc., 206 F.3d 763, 767 (8th Cir. 2000).

A. Chevron Standard of Review

In Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), the Supreme Court explained the analysis that a court must utilize when reviewing agency decisions which apply or interpret a statute that the agency administers. The Chevron test has two parts. First, a reviewing court must determine whether congressional intent is clear from the plain language of the statute. See id. at 842-43. "In ascertaining the plain meaning of the statute, the court must look to the particular statutory language at issue, as well as the language and design of the statute as a whole." K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988) (citation omitted). When an analysis of the statute reveals a clear congressional intent, an agency interpretation of the statute contrary to that intent is not entitled to deference. See id. A court must not defer when it "appears from the statute or legislative history that the accommodation is not one that Congress would have sanctioned." Chevron, 467 U.S. at 845. If, however, the language of the statute is ambiguous, and the legislative history reveals no clear congressional intent, a reviewing court must defer to a reasonable agency interpretation of the statutory provision. See id. at 843. In all cases, although the level of deference afforded an agency interpretation may appear high, the court remains the final authority in matters of statutory interpretation and "must reject administrative constructions which are contrary to clear congressional intent." Id. at 843 n.9.

B. Department of Labor Employer Notice Regulations

Subchapter I of the FMLA sets forth the FMLA's substantive provisions. An employee is eligible for FMLA leave if she has worked for a covered employer ² for at least 1,250 hours during the preceding twelve months. See 29 U.S.C. 2611(2)(A)(ii). The FMLA provides that an eligible employee shall be entitled to a total of twelve workweeks of leave during any twelve-month period for one or more of the following reasons: (1) the birth of the employee's child, (2) the placement of a child with the employee for adoption or foster care, (3) taking care of certain relatives with "serious health condition[s]," and (4) when the employee herself cannot "perform the functions" of her position because she suffers from a "serious health condition." See 29 U.S.C. 2612(a)(1). After an employee has taken FMLA leave, the employee is entitled to full restoration of her prior position or restoration to an "equivalent position with equivalent employment benefits, pay, and other terms and conditions of employment." 29 U.S.C. 2614(a)(1).

The FMLA directs the Secretary of Labor to, inter alia, "prescribe such regulations as are necessary to carry out subchapter I." 29 U.S.C. 2654. Although the FMLA does not itself require that the employer designate leave as FMLA leave, the DOL regulations do require such designation. Seizing on the lack of employer notice provisions in the text of the statute, the DOL has issued a series of regulations requiring that an employer provide an employee with notice that company leave is FMLA leave both in situations where the employee is taking paid leave and where the employee is taking unpaid leave and providing for severe consequences for the failure to give employees such notice. The DOL has mandated that "[i]n all circumstances, it is the employer's responsibility to designate leave, paid or unpaid, as FMLA-qualifying, and to give notice of the designation to the employee as provided in this section . . . ." 29 C.F.R. 825.208(a). In two separate regulations, the DOL provides that failure to notify an employee that leave taken pursuant to the company leave policy is also designated as FMLA leave will result in the employee still retaining her twelve week FMLA "entitlement." In 29 C.F.R. 825.208(c), the DOL applies the principle to paid leave under an employer provided leave program, stating:

If the employer has the requisite knowledge to make a determination that the paid leave is for an FMLA reason at the time the employer either gives notice of the need for leave or commences leave and fails to designate the leave as FMLA leave (and so notify the employee in accordance with paragraph (b)), the employer may not designate leave as FMLA leave retroactively, and may designate only prospectively as of the date of notification to the employee of the designation. In such circumstances, the employee is subject to the full protections of the Act, but none of the absence preceding the notice to the employee of the designation may be counted against the employee's 12-week FMLA leave entitlement.

29 C.F.R. 208(c). The DOL also applies the principle to unpaid employer provided leave, stating: "[i]f an employee takes paid or unpaid leave and the employer does not designate the leave as FMLA leave, the leave taken does not count against an employee's FMLA entitlement." 29 C.F.R. 825.700(a).

As stated above, the issue before the court is whether the above-quoted DOL regulations are a permissible interpretation of the FMLA. Recently, several courts have addressed this precise question and have come to differing conclusions, resulting in a split of authority. Compare McGregor v. Autozone, Inc., 180 F.3d 1305 (11th Cir. 1999) (striking down the regulations because they improperly expand the...